16 December 2008

Federal Interest Rates Fall

In the wake of the action of the Federal Reserve today, the Prime Rate has fallen to 3.25% The Fed Funds Target Rate is now a Target Range of 0% to .25%, down from 1.00% prior to the action.

This largely exhausts the ability of the Fed to boost the economy by lowering interest rates. The most recent precedent for such action was that of the Japanese Central Bank during a prolonged recession there. The Japanese equivalent of the federal funds rate was kept at zero percent for a prolonged period.